Carl Icahn, a man with a plan for Yahoo

Answering critics who said he had no plan for managing Yahoo and therefore little leverage with which to negotiate a sale to Microsoft, activist investor Carl Icahn today outlined what steps he plans to take if he unseats the current Yahoo board.

He also gave Yahoo Chairman Roy Bostock some new, explicit advice for the period between now and Aug. 1, the annual meeting at which Icahn's slate of directors could be voted into power: publicly offer to sell Yahoo to Microsoft for $34.375 a share.

That price is between the $37 that Yahoo CEO Jerry Yang was holding out for May 3, when Microsoft walked out on deal talks, and $33, which was the software titan's last offer. Because we now know that Icahn has been talking with Microsoft, that awfully specific price raises the question of what word he has gotten about Microsoft's limits.

As for his platform, if no deal with Microsoft occurs by the end of July and shareholders put him in charge, Icahn plans to:

• Drop the company's costly severance plan for Yahoo employees, which would add from hundreds of millions to billions of dollars to the Microsoft price.

• Hire a new CEO and restore Yang's title to "Chief Yahoo."

• Tell Microsoft that it had better explain how any "alternative transaction," such as the search alliance now being contemplated, could get Yahoo's stock to $33, or else forget about it.

• Try again for a full sale to Microsoft by agreeing to take the price he suggested, $34.375.

• And if that isn't doable, strike a search alliance with Google that can be unwound if Microsoft comes back with a new bid after all.

Yahoo wasted little time in firing back that Icahn's plans were in need of further baking. As for hanging a price tag on Yahoo, Bostock called the idea "ill advised."

"As we have stated numerous times publicly and privately," he said, "we are open to any transaction including a sale to Microsoft if it is in the best interests of shareholders."

-- Joseph Menn

Photo: Michael Nagle. Credit: Getty Images